reorganization, your july plan, i have two questions. you have single line accountability from quality to quality to you. it should have been that way to begin with. in our research, there was a time where there were clearly trying to toss that down. today, who controls the decision f how much money ithe qc department can spend it? who is responsible for making sure they are fully funded and not part of an edict for lower cost? like to clarify one point. we have looked at the time from 2007 through 2009, and again, the costs on the quality were flat. actually, the increased during that time, and the head count was constant also. >> that came out in the first hearing. i'm looking at in your plan

going forward -- our responsibility is to fix the fda going forward, but also to have confidence in companies like yours -- and who determines if there are sufficient funds to date? the plant manager, a division ceo, chief operating officer, chief financial officer? if the quality-control people believe they do not have the resources, whether it is the new tool, advanced technology in the direction line, or actual personnel, how is that done today so that we can know that those cost efficiencies are not being looked at by someone far away and too many chains between them? >> that will be determined by the quality people directly to the individual who reports to me and myself. we have let it be known that we will not get in the way of costs. we want to make sure we are investing appropriately in the quality and that that decision will be made directly up to and including myself. >> fort washington, when it

reopens, tell me how it will be different in a way that american people can eventually believe in a product that comes from there. >> we are working closely with the fda external consultants and our own people to invest $100 million across the facilities. we will make that a state of the art facility. it will not be opened up until we are sure that it is state of the art. we want to make sure it is the best in the world. i guarantee it will be state of the art, and people can have the highest degree of confidence we will not ship a product out until we have been able to satisfy the expectations of the people who will use our products. >> on august 19, an online article suggested that mcdonnell had exceptional quality control measures until 2002, the year if

you assumed the position of chairman and chief executive officer. the article suggested that cost- cutting had a significant impact on the quality control standards and procedures across the company. are you familiar with that article? >> yes, sir. >> further, the article is critical of your ability to manage the consumer products business we are discussing today. is it possible at cost cutting contributed to the culture that created the quality issues? >> i did not believe that cost cutting contributed to this. >> do you think that's the cost cutting culture may have inadvertently created a situation in which santa recalls and processes that did not put consumer safety first could occur? >> no, sir. could i elaborate on that. >> while we have five minutes, but i do want you to answer. >> i do not believe that cost cutting nor financials were put

ahead of the quality for patients at any of our facilities. >> is it your testimony, you stated that mcneil believed the fed to recall -- phantom recall was an expeditious way to remove the remaining caplets from store shelves. if the product was not good enough for safe enough to sell, why would it be good enough for consumers to keep it in their homes in their medicine cabinets? >> first of all, i think we have looked at this closely and determined there was no risk, no safety hazard to patients who consume these products. we thought it was a way to expeditiously get the product out of the market, and i think it was in may that we sent a letter to customers notifying them of this action and telling them that we wanted to remove the products that were in the facilities. >> why do you think they conducted this phantom recall?

>> that i cannot address. i would not quite characterize it that way, but i do believe that we kept people informed. we just talked about the document in april -- in march, saying that we were going to approach this in the way of taking an audit. we've made a mistake in that we did not say we would be acquiring or retrieving the product during that time, but shortly thereafter, we notified the fda of our actions, our intent, and that we would have the product off the market in july. >> i spent some time halfway complimenting you on making some changes. you have made some significant changes, have you not? >> yes, sir, and i think it is the guidance of the committee that has helped us see some of the issues we really did need to make, and we have taken it beyond fort washington to make sure we have learned and grown

and continue to learn across johnson and johnson. >> let me ask you this question about how much you have learned and grown. you have stated that you have addressed the issues with mcneil consumer healthcare by changing the senior leadership. yet, mr. peter loser -- do you know him? >> yes, sir. -- peter luther. the current president stays in place. it seems disingenuous to suggest you have fixed the problem when key people involved -- i call it a phantom recall -- remain in place. can you comment on whether mr. luther is competent to do what is needed to fix the problem when he was involved in a problem originally? >> yes, sir, and i do appreciate the way you refer to the recall. he has been a long serving employee. he has been a good employee for

a very good -- a very extended time. he has been very committed to improving and revamping the facility. he is very committed to doing that, and we are looking forward to the results of what he is doing. i think he is a good employee who will contribute to rectifying this problem. >> and so, the same folks that were around when the problem took place, you then put it in their hands to fix the problem? is that it? and i think you said in a very sincere way that you were looking to get the public's trust, and we all know that in order to get the public's trust, you need to have people in place that the consumers trust. to me, that does not make very much sense to put the person who was in charge when the problem came up back in charge. do you follow me? >> yes, i do, and i think we all share accountability. mr. luther was in charge, but

you can see that there were many changes that were taken to insure that we have the best representation. as i said, mr. luther has been a long serving employee who has done a very good job for us, but he has also committed to and has been very instrumental in making sure that we are revamping and improving the facility, so i think there is accountability that is shared across the organization, and i think the players that need to be replaced have been replaced. >> thank you very much. i yield five minutes to the gentleman from utah. >> thank you. with the motrin phantom or silent recall, was it the understanding of mcneil that until 2009, the fda was not requesting the recall? >> yes, that is our understanding. >> had the fda wanted or suggested a recall at the time the problem was discovered,

would you have issued a recall? >> i believe that the fda told us in that time that they wanted to classify hour retrieval as a recall, and we file the forms almost immediately. >> what percentage of the product shipped was actually recall? do you have any idea? >> i estimate about 1%. >> mr. weldon, you said in your testimony that the right thing to do was an imperative for you. i am having a hard time with the directive from the ceo's office and the way you feel personally with what happened on the ground. work any of the personnel fired, relieved of their duties, dismissed, devoted? what happened to all these players that were involved from your operation? >> i cannot comment. i know some people have been

relieved of their responsibilities, and there are some new people in the facilities, yes. >> to elaborate on mr. weldon's point, we have a new head of manufacturing, a new head of quality, and the two largest plants that we have, we have new people in manufacturing. >> was anybody fired? >> yes. this is my point. >> mr. weldon, i believe you when you personally say you want to do the right thing, but i have a hard time rectifying what was actually happening on the ground within your organization. you say you want to take personal was possibility for it. let me read you this excerpt from an e-mail. "the fda is really bending the rules in this case because of

the fact that we stopped distribution a while ago." does that not imply that there was some encouragement from johnson and johnson to bend the rules? >> again, i cannot directly know what was meant by that. it says that the -- the e-mail says exactly what it says. i think what we are looking at is the ability to dialogue and make the right decisions. >> you say that, but when you say the fda is really betting the rules, that is coming from a johnson and johnson employee to another johnson and johnson employee. it does not look as if you are doing open " the right thing to do." let me read another e-mail. "regarding fda documents, all my conversation with the fda director here i am for rico have been off the record.

this happened due to my good relationship with her, and that is why we are doing something very different." is that inappropriate mode of conduct? does this regularly have been above and beyond this one instance? were you having off the record discussions, that the relationship is so cozy? is this common practice? is this something you condone? >> we do not condone this. i cannot, for the conversations that go on across the organization. we would like to have, and i think we have worked cooperatively with the fda to ensure that we have a dialogue to make sure that the right things are done for the patients and to make sure we are behaving in a proper way. as far as being able to comment as to whether -- on specific e- mails, i cannot comment on this. >> help me understand on the record, johnson and johnson's commitment on what is the proper way.

>> what is the proper way? to continue to dialogue with the fda, to make sure we are looking out for the best interests of patients. if i could elaborate a little bit, i think we try to establish ourselves -- i think there was a reference that the chairman made to our credo, and our first responsibility is to the people that use our products. i have stated that we let them down. this is not one of our best moments. we are going to fix it and improve on it, and we are stressing -- i have gone out to our facilities. i have talked to our people, and i have gone to our leadership to ensure that we continue to reinforce the responsibility we have to the people that use our products. there is nothing more important than insuring the safety and quality of our products, so going forward, we are committed to doing the right thing for patients. >> thank you. my time is expired. i will yield back. >> i yield five minutes to the

gentleman from ohio. >> thank you very much. the committee has documents that demonstrate that on september 18, 2009, there was a letter to health care professionals explaining the recall of children's and infants tylenol. on the third line of the second paragraph of this particular paragraph, there is a clear mention of children with underlying pulmonary disease, cystic fibrosis, and compromise of any systems -- of immune systems are at high risk. there was another document just six days later that describes the recall of children and infants tylenol directed at the public, but there was no mention of any conditions a child might have like cystic fibrosis that would make them more vulnerable. it makes sense in case you have to go to the doctor to get your

medicine, but the doctor would have a chance to convey the hazard to the patient, but this is an over-the-counter drug. apparently, they kept the public out of the loop. about this pattern -- we have a feeling the product was defective that kept it away from public knowledge. they hired phantom contractors who purchased the product but did not inform -- in fact, the contractors were told not to tell store personnel. inform the doctors, do not inform the public. what we have here, i think, is a pattern of concealment. one of the things i am concerned about, with all due respect, your presentation has all the earmarks of coaching from these spin doctors who help corporate executives put a good face on his conduct.

throw yourself on the mercy of the court. "we did wrong." but it is a pattern of concealment. you cannot call that pattern a mistake. you keep making a mistake over and over. someone has to ask if this is the way you do business or the way you did business. i was present at your testimony the last time. there is a transcript of your testimony, and i listened carefully when you said at the time of the hearing that you were not aware of any retrieval action. i have here a memo which the chairman alluded to in his opening statement, which is from -- is to gary benedictine from bob miller -- to gary benedict from bob miller. "as you know, we have negotiated

an agreement with the fda not to formally conduct a recall, but rather conduct a soft market withdrawal. this was a major win for us as it limits the press that will be seen. we had committed to the fda to complete this withdrawal by july 15. there have been continuing issues trying to get a purchase order from the marketing group, which is now putting our ability to meet the july 15 time frame in jeopardy. at the same time as we delay this, the cost to complete the work continues to increase because of the fact that the outside resourced" -- that is, the people involved in the phantom recall -- "will now need more resources to expedite the work. it is now estimated this will cost approximately $400,000, which is approximately two times what was originally quoted."

peter luther has an answer. "given our current financial situation, i hope we are not going to double our costs to do this. let's make this happen asap." since you are the head of this consumer group, are you trying to lead this committee to believe that you knew nothing about it? apparently from this memo, there was widespread discussion within your organization about a phantom recall, about the cost of the recall, about not being able to get cooperation from the marketing people. you are at the top of this group, and you knew nothing about it? i'm not talking about what is on the record. are you saying that no one ever talked to you about it? not only that you have no recollection, but you are sure no one talked to you about it?

>> thank you for the opportunity. as i said in my opening testimony -- >> answer my question. not your opening testimony. >> i did not know at the time that i testified in may. i have since learned that there was a retrieval going on. i did not know that at the time of my testimony. >> this testimony is lacking in credibility in light of this particular document. thank you, mr. chairman. >> i now recognize the lady from washington, d.c., congresswoman norton. >> i thank you. i have a question about children's medicine. we have a mcneil document that shows the the contaminant was discovered in april 2008, and another document that shows

that more than 8 million bottles have been shipped, starting in march 2008. when you put these two documents together, does this not mean that although your company recalled 8 million bottles of the children's medicine in 2009, that the fact is that you had discovered the problem at least a year earlier in 2008? >> may i comment on that? >> yes, this is a question to you. >> i would like to maybe clarify the record as -- in terms of what exactly took place. we are talking about the potential bacterial contamination of the product. just to may be shed a little

light on it, the way we manufacture our product is we order products from -- let's say, raw materials or from suppliers. we then test those raw materials, manufacture product, test the product, and then we release the product. what happened in this case is we have done that, and in a batch of raw materials that claim -- came from the supplier, we detected this. we want to be clear that none of that was used in any product that was manufactured or left our facility. we went back and check the product. we want to make sure there was no risk to anybody that would consume this product. the following year, and i think you have said, in 2009, the fda came to inspect our facility, and they found exactly what we have done, and they said that there could be a risk to the

product that was delivered. i want to be clear -- we have never used the raw materials that have the contaminant. we felt confident in the products we have release. >> you said in 2008 that those bottles that had been shipped, starting in 2009, which your own documents say get consumed very quickly -- >> that is correct. >> that you believe that none of this contaminant made its way into those 8 million bottles. >> that is correct because the raw material we did not used to manufacture any products. we eliminated that. the position of the fda, and in discussion we said fine, was that there could have been in some product, so we recall the

product, but we were confident in the manufacturing process, the checks that we use, and then, we have a thing called routine samples where we take these and put them aside of the products that were manufactured. we checked that after we brought the product that, and there was no trace, but to protect patients, and as a precautionary measure, and i think we also mentioned this in the communications that went out to the customers that we had -- we said that there was a product there that we did not know had any problems. we have worked closely with the fda on this to take the product off the market, and today, we still have no -- we do not feel and we have no indication that any product that was ever shipped had the contaminant, but because of the product we did not use, the raw material, there was a concern there could have been a potential risk, so we accepted that and withdrew the product, but we have never

confirmed that any of the contaminant was in a product. the raw material was never used to manufacture the product that was shipped out of the facility. >> in any of those 8 million? >> in any of those 8 million, yes, ma'am. >> is it not true the vials of motrin tablets can no longer be found on your shelves because you no longer make them? >> that is correct to the best of my knowledge. bamut is it commonly known the those tablets were removed because the product was defective? >> yes, ma'am. again, to clarify, we identified there was never a health risk to patients. what we found was that the product dissolves more slowly than we would have liked it too,

and it was supposed to have this all, so we went out and took the product off the shelf. that is correct. >> i wonder if you could explain this guidance. we have another document here, given to johnson and johnson and to mcneil employees to tell the employee that product is no longer on the shelf because your company no longer makes it. here is the e-mail. it is a recall, and the consumer will not know that we recall it. our candid response to the customers is that we no longer make the eight-pound while. >> i'm not familiar with that specific document. i'm not sure if it refers to -- if it was referring to notifying our own internal employees that we no longer made it. >> it tells your employees what

to tell the customers. >> that is correct. again, i did not see the document. i do not know, but we do no longer make that product. that is absolutely correct. >> you do have the document before you, though, understand. the document says, " unfortunately, the consumer q in a form does not apply to the motrin products. since it is not a recall and the consumer will not know that we recall if. they simply will not be able to find it on the shelf. they will not know we recall it. they simply will know they are not able to find it on the shelf. our candid response to the consumer is that we no longer make the eight-count file. >> can i take a moment and just

read this? >> please. >> on that note, i will give the gentlewoman additional time. >> thank you, mr. chairman. i thought he had the document and have looked at it. >> i did. i just had not looked at it. i apologize. it refers to a consumer q&a that i am not aware of, but it does say the response to consumer is that we no longer make that product. that is correct. we no longer make it. >> is that the response under all the circumstances that should have been made? "no recall. we just do not make it." >> there are some lessons we have learned, and you all helped

us with this. some of the wording we have used and the directions we have given have been inappropriate. i can assure you that we will be much more transparent with our customers to the people that would have our products in the future. >> the difference between telling a consumer you no longer make a product, which may simply mean you decided to move on to another product, and telling the consumer that the product has been recalled so that the consumer may know to look himself or herself for the product and all that goes along with recall products? >> yes, ma'am, and i do appreciate your comments. i think in may, we did send out an announcement saying that we would be taking these products off the shelves, but i think your point is well taken. thank you. >> i now yield five minutes to the gentleman from missouri.

>> thank you. there were repeated instances of alarming problems with johnson and johnson's children's medicine from 2008 to 2010. in april 2008, mcneil began receiving reports that an uncharacteristic older in its products was causing nausea, stomach pain, vomiting, and diarrhea. fda found that mcneil's initial investigation into these complaints was unjustifiably delayed and terminated prematurely. over 100 additional complaints later, mcneil did not discover the root cause of the contamination until september

2009. why did it take so long to figure out the cause of the contamination? >> yes, sir, i -- this was an area where we have learned a very important lesson. as you said, in 2008, there were adverse events reported that we knew had to deal with the aroma of any product and there were some reported cases of roger and vomiting. we investigated that to see if there was a microbial content or any content in the product. we found that there was not, and we saw that the adverse events fell off. at that point, we identified that there would be no harm to patients. there was some gastric distress but no serious adverse events. the adverse events fell off. they came back in september in 2009. i'm not sure of exactly the date. we investigated and worked

closely with the fda to identify, and i have to say it was a very complex issue. this is a preservative -- there is a preservative put on wooden pallets that can migrate into packaging material. it was something that was hard to identify and determine. i want to be clear -- we should have determine the root cause in 2008. i do not want to defend our inaction there, and i think the fda pointed that out correctly to us. what we did do was working closely with the fda to identify this, and it was a difficult initiative that needed to be undertaken. i think that the fda help us understand and this led to new guidance for people to benefit by. i do not want to make excuses for what we should have done in 2008. as a corporation, we know today, if we have adverse events we need to investigate, we investigate them thoroughly until we determine the root

cause, and that is exactly what happened in this instance. we did not, and the fda was absolutely correct in pointing that out to us. it was a very scientifically challenging exercise, but that is no excuse. we did ultimately determine, and i think in combination with the fda -- >> by it leached through the -- >> yes, that is correct. they put a preservative on a wooden palette, which materials are shipped on, and the preservative can break down and the words you describe are very accurate, leach into the packing material. the packaging material, when you put the product in it and ship the product out, can actually cause this musty odor, this smell, and i think it was something -- again, i want to say that i think it was a combination of people working

closely together to determine this, and ultimately, a guidance document has gone out that will help many people in this area. >> regulations require drug makers to submit field reports within three working days of receipt of information concerning any bacteria logical contamination or any significant physical or other change or deterioration in its drug products. yet, when mcneil began receiving consumer complaints in 2008, they did not alert fda further when they had test results confirming the contamination. these results were not shared with fda. why did mcneil not share this information, as required? >> i cannot comment on that. i'm not aware of that specifically. >> can you explain it?

>> i do not know which incident you are referring to. >> your fda regulations require -- >> right, absolutely. >> let's go back to the first instance. did you report it within three days? you can twist my words if you like, but you still cannot get around the fact that you did not follow the rules that you are required to. you can twist my words if you want, but why did you not reported within three days? >> i was not trying to twist your words. >> do you understand the question now? >> we are aware of the regulations to the fda, and you are absolutely right. i do not know which incident you are talking about. >> any of the incidents. you did not report in a timely fashion.

why did you not? >> that, i cannot answer. i would say that in all instances, in some instances, i know that we did. i did not know the specific instance. if we did not, it was a mistake on our part. >> before we let you go, there are some phrases that have been used. i want to make sure the committee understands -- you use the term soft market withdrawal. what does that really mean? >> mr. chairman, i have no idea what soft market withdrawal is. i have heard the term -- >> it is used in e-mails we received. >> i am not familiar with the term. i do not know what it means. >> we do not use the term regularly. i have not heard it before this

instance. >> why with the employees use it? maybe it is the same thing as "phantom recall." i'm trying to figure this out. you have seen it. you have heard it. what do you think it means? we do not know. >> i agree with you. i think the language is very unfortunate. i also did not think it reflects accurately our priorities and the fact that we try to put the safety of patients first. the use of language is unfortunate. >> i think the comment that i would make is that i think we have learned a lot of lessons through this unfortunate situation. i have said to you and to the committee that we have learned and benefited by being here. i think we have discussed and

can show you the changes we have made, the commitments we are making, the resources we are investing, the people we are putting into roles. i can only assure you that we will the everything in our power to make sure this never happens again. i think the characterization of phantom, soft, all kinds of things i cannot explain to you. i wish i could, and i think many people use many different terms. i can assure you that we are committed to resolving these problems, to fix these problems, and make sure we are giving the highest quality products to patients. as i said earlier, i think that -- and i will tell you honestly that the fda and johnson and johnson, the people at mcneil have worked so closely together that we will be able to deliver some of these products into market next week, and that is much faster than we ever thought we could have done. our internal expectation was that it would have been much later. we are not able to fulfil the

whole market, but because of the efforts we have made collectively, we are going to be able to get these products back into markets for people that need them, and that is our greatest concern. i can only commit to you that we will do the best we can and everything we can to ensure this never happens again. >> the gentleman from ohio. >> with the unanimous consent of the committee, have a follow-up question to try to square this testimony that you just gave based on a committee documents i have just received. >> let me say that before i recognize the ranking member, let me say that i will give you two minutes to raise the issue. am i appreciate the indulgence of my colleagues. >> as we go to the second panel, i would only ask because of the gravity of this hearing, of the failures that johnson and

johnson and the corrective action that we are expecting you to do, plus the likelihood that we will have follow-up questions for you in writing, if you would both do the fairly extraordinary thing of remaining here through the fda testimony, we do believe that what you are doing is essential. we are obviously interested enough even after the house has adjourned to hold this hearing. this is important that the american people know we are getting it right. >> thank you. i also agree with the fact that we would appreciate it if you would stay and hear the fda testimony. >> thank you very much. we produced a document here to -- relating to the final remediation plan for the

children's tylenol. on the document -- my last question, pointed out that bob miller and peter luther were involved in communications involving motrin, and for some reason, ms. goggin who was in the loop on children's tylenol, would lead this committee to believe that it is something that apparently have wide circulation within her organization and she did not know anything about it. one of two things has happened here -- either she was out of the loop on that, and if she was, the pattern of concealment from her needs to be further investigated -- or the other part is that you are not telling the truth. would you like to respond to why you were kept in the loop on

this, on the children's tylenol issue, but you were, as you say, kept out of the loop or implied that you were kept out of the loop on the motrin issue? can you square the discrepancy there? >> i was not in the loop on the motrin recall, but i was on the children's tylenol recall. that is because we received the 483 to observations regarding the issue of the children's recall that you. >> but why? were you concerned about that when you found out? who kept you out of the wood? why were they in the loop but you were not? >> i was not in the loop, as i say, for the motrin recall until i came to the committee, and i went back and look at the documents my testimony. on the children's tylenol recall, which happen when we

received the fda 483 in 2009, i was not aware. i was very displeased, and i may be inserted myself if you will. >> i'm going to ask you to direct staff to call some of the people on this list who were involved in these communications because we may find something that might be of benefit to this committee. >> without objection, so ordered. >> let me thank the two of you for coming in and giving your testimony. we really appreciate it because, as you can see, there is a concern here. we also want to make certain that when medication is on the shelf, the it is safe. we have that obligation and responsibility, so thank you again. we hope that you will remain and hear the testimony of the fda. thank you. we now move to our second panel. [captioning performed by national captioning institute] [captions copyright national

cable satellite corp. 2010] >> the principal deputy commissioner at the food and drug administration, dr. joshua sharfsteini. it is committee policy that we swear all our participants in. do you swear to tell the truth and nothing but the whole truth?

if so, answered in the affirmative. thank you. let the record reflect that he answered yes, so you may be seated. mr. sharfstein, you have five minutes deliver your testimony, which will allow the members to raise an opportunity to raise questions with you. you may proceed. >> thank you very much. i am the principal deputy commissioner of the fda. thank you for the opportunity to testify today. i would like to provide a brief update on the fda's investigation of the series quality lapses at mcneil and address the phantom recall. fda continues to investigate whether any serious illnesses or deaths have been linked to the recall. since the last hearing, fda has looked into adverse events that might be linked.

the investigation covers over 2400 reports through the two years preceding the recall as well as the two months immediately afterward. we did not in this process established any direct link to a serious adverse event, including death, in the recall product. second, the fda has worked with men kneel to improve its two facilities at the center of the recall. in order rico, as has been mentioned, the fda became aware that mcneil has received reports of products having a musty odor and they did not conduct a thorough, timely investigation of the issue or file timely reports. after fda personnel urged them to do more, the firm identified because of the order to be a chemical called tba, a pesticide used to treat wooden palace. fda issued a warning related to this failure, and they have sent since -- since sent letters to industry. these have led to additional

recalls, and macneil informed us that the firm stopped using the wooden pallets, cleaned its facilities, an increase oversight standards of suppliers. fda is currently conducting a follow-up inspection of the facility. in pennsylvania, fda found that the facility had not conducted sufficient investigations. the firm announced it would conduct a major recall, as you know, because of excess of particular matter and possible microbial contamination. subsequently, the firm held a series of meetings with fda and a dignified many corrective actions the company would take. these actions include ceasing manufacture and renovation of the facility, and using a third- party expert consulting firm to review all aspects of for manufacturing quality changes. we continue to review and provide feedback for the company. in addition, since the last hearing, all facilities associated with neil have been

-- investigated at least once within the past year. fda has found inspection of inconsistencies in all of these facilities of varying degrees. one, in consistency is the failure to investigate and correct product problems in a prompt manner. mcneil fails to respond in a -- with a, a corrective plan. fda is continuing to investigate to make sure that plans are effective. fourth, after continuing discussions with johnson and johnson, the parent company of mcneil, to correct the oversight that led to serious problems, we recognize the company is taking the concerns seriously and many changes have been made. we continue to keep a close eye on the facility until the company earns our trust back here in february 2010, fda called an extraordinary meeting of the senior executives of johnson and johnson where the agency discussed a series of -- problems that mcneil. more importantly, we confronted

executives about the quality system to insure the safety of the product. as part of the meeting, the agency raised concerns about what has been called the phantom recall in spring of 2009. fda raises concerns because it seemed strange and concerning the company had paid a contractor to go into retail stores across the country to purchase retell product while acting like a regular customer and not disclosing what was going on. in summer 2009, the agency told the company to register a real recall. the committee has investigated the event further, using its authority to gather additional information from the company and agency. because of the committee but the investigation, we understand much more about these events. my understanding comes from documents that have been provided by an mcneil and fda. i have not had access to all the materials gathered in a related investigation. based on what we know now, the phantom recall raises important questions for johnson and johnson, the fda, and congress.

the current voluntary system of drug recalls depends on companies providing complete information to the agency and recalling products in a prompt and appropriate manner. as you and committee members have stated, the new documents raise questions about whether the company's actions have met the standard. regardless of the behavior of the company, it is the job of the fda to do everything to protect the public. was clear in 2008 that the motrin auction did not meet these requirements. this took too long. part of the delay can be attributed to several months been checking whether or not any remaining product was on the shelves, and as a result, less than forthright communication about how much would be on the shelves. the company was telling us there was nothing on the shelves. internal documents indicate they knew there was product on the shelves.

in april 2009, the company said a report indicating it was purchasing the product on the shelves of retailers. the indication did not fully disclose the scale or the way the company was intended to proceed. in other words, it did not disclose the phantom part of the phantom recall. it took until july 4 fda to tell the company that a recall should be conducted. in july, fda not only instructed the company that it should be registered as a recall, but then went on to confront the senior executives at johnson and johnson about what happened. in my opinion, however, the message that was delivered should have been delivered sooner by fda. fda has no legal authority to require manufacturers to recall a drug product that is unsafe or not in compliance with current, good manufacturing practice. the recall system depends on full and open disclosure, trust, and industry acceptance of its responsibilities. at the ages and expect firms to

notify when it makes a recall, but firms have no legal requirement to provide this type of notification. the agency does not have the authority to approve the manner in which they conduct a recall or to direct the firm to adopt a different recall strategy. though the agency is able to accomplish most drug recalls with the cooperation of the manufacturer, there are instances in which firms are reluctant or unwilling to conduct a recall would do so in a time frame fda believes is necessary and appropriate to protect public health. if a company refuses, fda can take them to court, but this can be time-consuming and cumbersome. when the product has already been widely distributed, the agency would have to take hundreds of such procedures to ensure that all their product has been removed from the market. >> can i ask unanimous consent that the entire statement be placed in a statement so we can get to q&a? we have received it. >> without objection, your

entire statement will be included into the record. so if you would summarize. >> i'm sorry, i just have two more sentences. the events of the phantom recall basis questions about the current voluntary recall system. in this case, the fda simply have the authority to order a recall be down in the right way, i did not believe these events would have occurred. thank you for the opportunity to testify today, and i'm ready for questions. >> let me thank you for your statement. let me begin by asking -- did the fda approve johnson and johnson's phantom recall of motrin? >> no. the fda does not approve recalls. it is at the discretion of the company. the second thing i think is very important is the phantom part of the phantom recall, and this was part of my testimony previously. it relates to the fact that contractors were telling people to go out and act like regular

customers and not tell the truth about what they were doing in the stores. based on what i know, based on the documents that i reviewed, i did not see any indication that fda was aware at the time that those types of activities were going on or approved. >> are you familiar with this soft market withdrawal term? >> i am not familiar with that term. >> when johnson and johnson sent the fda a letter april 2009, talking about buying defective motrin, why did the fda not become concerned and take action right away? what led to the delay? >> i think that is a very fair question for the committee to ask. that report disclosed that mcneil was retrieving product that failed to meet specifications and removing the product was the right thing for mcneil to be doing, but what it did not say in that report was

that -- all it said was, "we are going to retrieve it from the shelves" or however they phrased it. it did not say they would be telling people to act by regular customers or not disclose the facts when they were asked what happened when they went out. i think that in part because there was limited information, that might have contributed to the delay, but i also think that fda should have been asking questions right away and figure out what the agency eventually figured out -- that this really did not -- this really did need to be registered as a recall. >> johnson's recall of 135 million bottles of children's medicine, and is the fda satisfied with what johnson and johnson is doing to solve the problems? are you satisfied with johnson and johnson? >> what went wrong as far as the

notes in the music -- the notes are the specific details and inspection of observations, the facts that there were batches that were super potent oregon batches that may have particles, or an issue with how they investigated and responded to potential bacterial contamination, but the music is that the company had an inadequate quality system, and you can see that in multiple facilities. fda is responding to the notes to the music. you have heard it in the testimony. there are major changes at mcneil. fda has been very involved in insuring those are the right kinds of changes, and fda is committed to making sure when this facility is up and running that it is in compliance. we are comfortable with where things are now. we appreciate the commitment of mcneil and johnson and johnson's leadership to fix the problem, but this is a very serious problem, and we are not going to take anything for granted.

>> does the fda need more enforcement authority of funding to be able to respond to issues like the johnson and johnson recall? this bothers me, for something like this to happen. we are concerned about safety. does the fda need additional authority? >> i think there are a couple of things. to be put in a context that fda did identify these lapses before there was a serious health consequences. we are not finding that there are serious illnesses or deaths linked to this problem, and the agency, through its inspections and multiple meetings at the company and aggressive and extraordinary meetings of the company have brought about change. having said that, all of us want to prevent these things. we want to be responding much faster in some cases than even what happened here, and i think that the issues of resources and authority are very fair question. i testified that if fda had had

mandatory recall authority, i think things would have gone a lot different. >> now, how are you working with johnson and johnson to correct this and make sure it does not happen again? >> both at the individual facility level and at the corporate level, so we are helping them with individual quality issues they had as well as how they structure their quality program to make sure that's the kinds of lapses that they had do not happen again. >> my time is expired, and i yield five minutes to the gentleman from california. ok, the gentleman from utah. >> thank you for being here. ms. torres, can you help explain to me -- what is her current status? fired, demoted, promoted? >> i understand that she is still the district director. >> you found that she has done

nothing inappropriate? she acted just the way she should have? you are totally comfortable with the way she acted? >> i would say this is a matter that is under investigation. we are looking at what happened here. things should have happened sooner on the part of fda. that is something we're looking at, and based on what we find and conclude, that could lead to different changes. >> is there an opportunity for this committee to interact with her? is there any reason there is hesitation on the part of the fda to make her on available? >> i know at least minority staff had requested to speak with her, and fda declined because she is a central witness in a related criminal investigation. >> when you say related criminal investigation, is that related to johnson and johnson in this case, or related to some other group or product? >> i believe it is related to this. >> is it your common practice or

recommendation to not make sealed staff and people closest to the situation is available to the committee? >> my view as former staff member of this community -- i think the congress should get as much information as possible. >> is it your recommendation that she should be made available? >> no, but i also recognize the importance of the integrity in the criminal investigation. >> why with a criminal investigation be slowed down by our hearings have before this committee? >> i do not think that is a judgment that fda should make. we turned to the departments of justice and their career process, and we got instructions from them. they said basically that it would be a problem and that is why. but i am not a lawyer. i do not know the cases. i cannot really comment, but basically, we are relying on the department of justice. >> i think there is frustration, at least from this member, that she should be made available.

the other stab should be made available in the spirit of full disclosure. i am a bit troubled by this elaine, the fda spokesperson, and very recently, she said -- she appeared in the wallace j.", and reuters and said that any evidence to suggest fda had knowledge of the phantom recall is based on quoting documents selectively and out of context and ignoring other documents as to what occurred. >> right. .

>> 5 has very specific implications carryover -- implication. certainly with the company's you interact with, so if a company said, we want our recall, you would have of predicted idea. gerd >> not all recalls are the

same. they have to file for reform. >> i am looking at this report dated april 21, 2009, and heard of it says the subject was removed during the visit. visits will be completed by july 15, 2009 to remove any product that is found. i am not trying to excuse their actions. >> fda was informed exactly of fact, but that is not -- >> how did they say, we do not know anything about it? >> what she said the fbi did not know is about flying parts of three call -- lying part of the recall.

that is still not in the documents. >> we all agree, but my concern is -- i would appreciate you considering that the fda station was very -- statement was very strong. there was evidence you should look into that. when they say they are not doing a recall, they should probe and ask questions. let me read a couple of things. this is from internal documents. "fda is really bending the rules because we stopped distribution awhile ago. for the fda to say, we know nothing about this but then to say we have documents that they are bending the rules --

>> that was referring to the fact that we were not ordering a recall without a check. when you said because -- basically our products on the markets should be recalled, but the companies said, we do not think it is out there. they said specifically, there is none out there. they use that argument, and the district office said, if there is none of their, you do not need to do recall. regulations permit if there is none now they're not to do a recall. good >> i think it is irresponsible for the fda to put out of public statement when the documentation shows it was not a recall, that there is a criminal

investigation in place, that there are internal documents -- i think you have plenty of reasons to not attack the committee for the testimony we were able to draw out, but you essentially came out days ago and attack the credibility of what the committee is trying to do, and we are trying to inform the public and let them come to their own conclusions. there was plenty of evidence that did not warrant the strong statements from the fda. i yield back the balance of my time. >> thank you for the questioning. we now yield to the gentleman from maryland. >> he asked some pointed questions, and there is a

sentence that said the assessment reform demonstrated that on a statistical basis, a low amount is essentially still of the retail level. are you familiar with that? what did that say to you? >> the month before in the march version of the same document, it actually said, it is expected none of the loss at that level, and at the same time, there are several documents that they were expecting to find more, and they found more. i will read one e-mailed from april 16, and it said, we found a 264 units that would project potentially 5280 units across

5000 stores for 6.3% of the total project manufactured and shipped. >> this was not information you had at the time? >> as far as i know. >> there is a brief statement that "the product found in storage was removed during the visits." how would the fda normally interpret the? how would the fda sphere and the general public be informed? >> that is an excellent question. i spoke to the head of enforcement, and he said he looked at that report, and he said it was on remarkable, that

that is the kind of thing companies do for the recalls. what is remarkable is the phantom part, that they were concealing it when they went out, and that is not in there, and he said, that is remarkable. >> he said they would act like regular. he said, there must be no mention of this being a recall of the product, so when you say you did not know about the phantom part, that is what you mean? >> yes. >> apparently there is a situation where something was not dissolving properly, and it

could be harmful to some of it -- nobody was under the impression it could be harmful to somebody who bought it. >> it would not necessarily be as effective. we did not think it caused a safety problem. we did not think it would be as effective because there is less medicine in the pill. >> did you know they were going into 40 states? >> i do not know if i can answer completely other than to point to that document. i think what is clear, and this is where i believe they could have done better, is that document does not tell a whole lot, and we should have been asking questions. they did find out, and then they called the company to account for it, and that is why we are

here. >> you are admitting the fda did not do all it should have done. is that right? >> that is correct. >> we do not want to take flight of the fact that they could have done better, too, right? -- to make light of the fact that they could have done better, too, right? >> they could have handled their quality problems in a much better way. the fda did identify these problems. we have to ask ourselves whether we could have done so faster. >> how do we know that we now have an fda and a department that deals with it that would deal with it in a way that would cause the trust to come to citizens of our country who might be buying the product? >> i would point in part to the work we have done with these

companies since this came to light, and i would also say that dr. hamburg, the commissioner, and i actually committed to strengthening enforcement of the fda. i invite the new head of enforcement, the former inspector general perry had i asked her to understand what had gone on in the case, and the need as she establishes leadership over this part of the fda, the need to do everything we can tear a good >> could you raise your -- everything we can. >> can you raise your hand? >> i now yield five minutes to the gentlewoman from washington, d.c. >> i was really interested in the answer to the question regarding the children's

medicines and 8 million bottles, and i want your opinion. this is the question to him as predicating by the documents. i wanted to know whether or not he should have recalled, not in 2009, but earlier, and he indicated they have looked at those samples and there was no contaminants. is that your view? >> it basically relates to zero lot of this substance -- relates to a lot of this substance.

i understand the company knew that certain things they did not use. others they tested and did not find the problem. the view was the testing of loan does not give enough confidence of safety. >> what should be done? >> what should be done is to recall it, and that is why it was recalls. this is what we believe good manufacturing practices required, and it relates to the concept that you cannot test quality into something. if there is a problem overall, you cannot use it. >> i would think especially with children's medicine. what it does show gives the

company will act quite normal absent regulations. i understand on page 5 you say what i would regard as a truism. it depends on providing information to the agency's. the voluntary system would assume that to be the case, but i must say, it has the same assumption made for 10 years about the financial system, the voluntarily and letting them go without regulations will do it,

in the same way the voluntary recall is an oxymoron, i do not see how we can continue to abide it and expect any companies to act other than the way people do to protect themselves and their shareholders. we have not learned from financial reform, and now we have to learn from children's medicine. i want to ask you about the recall of motrin. the you believe the company adequately informed the fda about the motrin issues beginning in 2008? >> we knew there was a defective

motrin issue of the reagan -- motrin issue. i do not think we were adequately informed. at the same time, they did not sign the -- they were expecting to find some on the shelves very good -- on the shelves. >> there was nothing you could do about if you're a good >> i do not believe the company informed the fda about the phantom part of the recall. i did not see evidence the fda was informed at that time. >> thank you, mr. chairman. >> i now yield five minutes.

>> i earlier reference your old boss, because i do think he was right when he said we had an obligation and were not meeting its, but i want to be true to his words pureed -- to his words. this is the record without setting down -- shutting down the plant you are saying, i need mandatory recall authority. you had the ability to shut down the factory. this is how many times you visited. you are working on the

committee, but under the bush administration, this was not dealt with. under your administration, this was not dealt with. this was the record of failure. i assume you read your procedure manual, which talks about the recall procedures. ok, let's go through and make sure we understand. the evidence shows a new product was being taken puree of red region was being taken. they may not have known that it was being recalled. your people believe it was not a recall, yet they were agreeing it was going to be removed from the shelves.

they were not asking for a recall. they were not doing what they have responsibilities to do, which is to agree to public statements. if they did not have a right to do a recall, yet a new product was being recalled, they have a right to participate in how that is being done. if anything, if they knew of product was being removed five of third-party contract, they did not ask or tell. they failed to do their job, because they had a manual that showed them how to do that. isn't it true that they knew it was being removed and did not assert any of the procedures in your manual? >> thank you for your questions,

and i respect the discussion of oversight. >> did they know product was being removed from the shelf and did not assert in any documents? >> they did assert it needed to be recalled in july. egghead >> they were informed the product was being removed from the shelf. your people did a press statement implying we were misleading the public, when your people knew they purchase the product. isn't that true? >> it is true othat they knew. >> purchasing by the product is of recall. >> it is a component of the recall.

>> you are not doing a public statement to encourage people to return the product so it can be brought back. yet you want us to believe it is all johnson and johnson. johnson & johnson made bad products. they were not working up to the standards, yet you want us to believe is all their faults and miss tora as is supposed to be given a pass while i have 4 inches of authority you did not a search. >> that is not what i testified. i did not testify it was johnson & johnson's fault. >> with the 35 plants in puerto rico. >> can i finish my previous thought thelma the fda finished

-- with my previous thought. they finished in july. >> they were told prior to that. >> i could read you the e-mail. >> that was six or seven months after they were aware of the problem. >> i testified that instruction should have come earlier. >> isn't it true it is not on your web site today? >> that is not true. >> would you please make it available to the committee? >> it is in the enforcement report of 2009. a good >> i asked about your web site. >> i got a printout listing it. i am happy to show it to you. it looks like it is from a web site. >> we will provide you with our

web site it is supposed to be on, and we can compare it later we will figure it out. fda realizes it is a critical responsibility. this is extremely important. that is why we are pleased there is an entire business to train companies to meet fda specifications for compliance. it is a corporate responsibility. we have to do everything we can very good >> for the record, i would like a complete -- to do everything we can. >> for the record, i would like a complete answer.

you testified they failed to meet the responsibilities. would you explain why you did a notification after the fact it was discovered by johnson & johnson and six by johnson & johnson, yet you put it out to an industry that was unaware of it, and you wanted to make it look like it was a problem with the company, yet it was undone by anyone in the industry. i find inconsistencies between your implying something terrible had happened but that you somehow cured it, and when all you did was publicize into an industry that would not have been aware of it. >> i would love to enter the question. >> there will not read a second

round. even though your time has expired, you can answer. >> that is what i deserve for being on the staff. what fda objected to eurwas nott there was a problem the company found but they identified a problem and did not report it for quite some time, and it was the push to investigate further that led them to discover the problem. if the company had come to us and said, we found a problem, we would say, that is terrific. instead, many months went by before a report came puree of we felt the company was not pursuing its diligently enough. we briefly -- we informed the rest of the industry so we could be on top of an emerging problem. >> i appreciate the answer, but

it flies in the face of -- when you discover new science, the expectation you are going to report its in a meaningful way, banks the question if the fda cannot even make up its mind on the july report 60 days later, i am seeing a pattern that we expect corporations to respond to news science discoveries in three days so everyone knows it is very clear that we do need to have reporting. again i think johnson & johnson was wrong not to give the heads up. this benefited all the industries, and i think three days is a nice time to say, we found something interesting puree did >> based on what the gentleman is saying, it seems like he wants to support my legislation.

that is why i yield to miss what sen. -- miss watson. >> johnson & johnson has dubbed the phantom recall of the adult motrin products as merely an assessment to determine how much product was in circulation. we knew this was not accurate because they proceeded to remove the product from the stores without informing customers or retailers of the defective products. is this a typical thing that happens, and what steps should they have taken when they discovered the problem with motrin? is this something that occurs

often? >> this is an unusual set of circumstances. that is why there was an extraordinary meeting with the parent company to discuss concern about it. what should happen is when there is a product out of specification, there is prompt notification of a recall. in this case, it is because they stop selling it before, they made the case there was not any out there and there might not need to be a recall. i am concerned that was not a fair representation to the agency. that was one of the steps that led this to take a lot longer than it should have, but i also acknowledged fda could have done more to make this happen sooner. >> during our previous hearing,

it was reported that 775 adverse events had been reported for children who took the recall of prague, and at the time, the fbi -- of product, and at fifth time, the fda could not determine if there was a direct link. i think it is important we fully investigate the effects these drugs could have on children. has the fda been investigating the adverse events report, and if so, how? >> i believe there was a team that pulled the recalled products and reviewed them and did not find there was evidence

establishing a link. in other specific cases, the fda actually went out, and we tested a sample, so everything we could do, we have done to try to assess this. we did not see evidence there were serious illnesses. >> to you have any reason to believe the adverse events were related to the recall, and what are the most common adverse events children have experienced? >> most of the adverse events were because of the medicine itself. each of those has its own set of

adverse events on the label. there are a list of things that could be included. people might take an overdose and have an adverse event because of that. that just happens. all medicines carry risks. >> i am addressing the chair. does your bill address this kind of thing? would your bill address that? >> it will address it, and it is still open to amendments and suggestions. >> thank you very much.

we need a co-sponsor. >> you will have one. >> let me say to you, thank you so much for your testimony. i think you are the appropriate person, because you are a pediatrician. the record will be open for several days. there are certain questions are members wanted to submit for the record, and we will leave it open. i want to thank you for being here. on that note, the committee stands adjourned to. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010]

>> california republican candidate for governor meg whitman took questions about allegations from her former housekeeper that she knowingly employed an undocumented worker for nine years. this took place in santa monica, california. >> hello, how are you? this is my husband. i think many of you met him. we are about to release a statement, so i thought i would walk you through the statement, and then we will take questions. i am going to take as many questions as you have.

this is truly a political smear on me and my family. our state is in a fiscal crisis. v.f. 2.3 million people without a job. -- we have 2.3 million people without a job. we are talking about things that are not on points. as i said, when the key was our

housekeeper from 2000 until 2009. she was a great employee. when she confessed she had falsified her record, we were surprised and shocked. she had broken the law. she wrote a statement, criticizing my actions. i would ask the chief law enforcement officer what he thinks i should have done instead.

ignore what i was told and breaks the law? i would be interested in what jerry brown would have done, and i think he should be ashamed of what his allies have done. athis is a smear attack, and he should be ashamed. coffee i felt bad for nicky. i am truly sorry she has been put in this position. this is why we need a system to help employers and a temporary guest programs so that people like niki can work in this country we believe. i am confident the voters of california will take this episode for what it is --

politics at its worst. they will reject it, and we can look forward to building california together. i look forward to taking your questions. >> i want to know what you have to say about what they are doing in regards to making her work extra hours and not reimbursing the money, and especially you kind of say you have to find somebody to replace her. what do you have to say? >> it is completely untrue. niki came to work for us 15 hours a week. after a bit of time, she said, i would like to take when they off to deal with my youngest child.

-- to take wednesday off to be with my youngest child. sometimes she worked 10 hours. sometimes she worked eight. we said, get the job done, and then you can go home. with regards to mileage, she never asked us for mileage. she ran a few of errands, but she never asked for mileage, and on her maternity leave, she said, i am pregnant with my serve child, and i have a friend who would like to work in my place, and if that is all right with you, that would be great for me, and when i am ready to come back, my friend will go back to her job, and i will come back to work for you. i said, that sounds great. >> [inaudible]

the information they believe it is providing to you puree get >> absolutely not true. neither my husband nor i received a letter, and if there is a letter, i did not know how they got it. it is not in our house. we never saw the letter, and as i understand, normally if that was to happen, they would have sent a letter refers to the employees and then to the employer, and i think there is a question of whether employers with less than 10 employees got a letter, so we have never seen such a letter. you will go next. >> when she confessed she was undocumented, why didn't you turn her into law enforcement?

>> i was very fond of her and did not want to make an example of her. it is not an obligation of the employer to turn in illegal employees. i said, i am not going to make an example of her. i encouraged her to do the right thing. what is the right thing to do? figure out how to come here legally, but i did not think it was the right thing to turn her aunt. >> you said it was difficult to let her go. if you are trying to be the chief executive of the state of california, as difficult as it would have been, shouldn't you have not informed law enforcement that you knew of a crime being committed?

i understood it would be difficult. isn't somebody who is supposed to lead a state supposed to make those difficult decisions? >> the law did not require employers to turn individuals in. i thought i did what was the right thing to do. everyone makes a decision. i felt like it was the right thing to do to terminate niki. it broke our hearts. we had to let her go. she came to our house to tell us, and she never came back to our house to work >> [inaudible] >> i think every employer needs to make a decision. you are not legally allowed to hire undocumented workers. as soon as i found out, we made

the decision to comply with the law. >> one more question. >> you are not supposed to get three. >> she is going to produce a letter that may have your name on it. are you suggesting she may have intercepted a letter? >> it is very possible. we never saw the letter. if she had gotten a letter alerting her to the problem and saying we are going to alert the employer, she may have been on full lookout for that letter. it pains me to say that. the niki i knew was not the one i saw of fat press conference. reading from that prepared

statement, those were not her words. it would pay me to believe that is what she has done, but i have no other explanation. >> each of them including the woman -- [inaudible] >> we have one housekeeper who is documented to work there. we have a landscaping service, a company that provides landscaping, and we ask them to make sure all the workers are documented, and we have a pool service that comes to clean the pool, and that is a service as well. >> [inaudible] >> i do not remember. we play by the rules.

we were very explicit with the agency's we used to find niki and other household help we have hired over the year. we need someone who is 100% documented to be here. we are going to withhold taxes, which we did with her and every other employee we have. we have been very specific. you are next. we have plenty of time. >> she said she could not travel to mexico. did you ever asked her directly whether she was illegal worker? >> no, we ask the agency, and we got a copy of her driver's license.

we got a copy of the form. we looked at the documentation, so when we hired her, i think she was legal because i had that documentation in front of me. >> there is no signature from an employer? >> i do not know if there is a requirement to sign those documents. i do not know whether we sign it or not. we got a package from the agency when she was hired that had the document. you are next. >> you could call and get a copy

of it because you are directly involved. did you contact them to see if they ever did send you a letter? >> i have not. >> would you made the region would you make that public if they sent it to you? -- would you make that public if they send it to you? >> how did her employment work? was she your employee? >> she was. we gave her a check every friday and left it on the counter for her. >> [inaudible] >> we did not. after she told us what happened, i called her back to say there was not anything we could do, and we had to terminate her employment. i have not talked to her since. >> she says there was a phone

call. >> when she left our house, we talk to our lawyer, and he said there is nothing that could be done. i said that on saturday. i think there is nothing that can be done. i think we have to let you go. >> you said its -- you knew it was going to cause trouble? >> not true. false allegation. >> were they in cahoots with jerry brown?

>> this is what californians and americans hate about politics. here we are in a classic case of smear politics. this is how career politicians operate. i heard this morning they knew exactly what was going on there is clear evidence. >> they came to you with the problem, but there was no recourse. there is no pathway to citizenship. would you change your opinion in that regard? >> i have said it is important to have a temporary guest worker program so people can be on a temporary basis and you can actually work here, but until we

prove we can get our arms around this illegal immigration problem, which is a serious problem, then i think we have to focus on getting the problem solved. we have to secure the borders. i voluntarily let niki go, but many employers need to make sure we do. we need to eliminate sanctuary cities. i think my first solution is a temporary guest worker program. once we prove we can stop the flow of illegal immigration into this country, we can have another discussion, but i do not think people are willing to have that discussion. >> can you verify -- did this

change your views? >> before i started, i had begun the verify system and talk to people about the accuracy of the system, and they admitted it was not as accurate as it should be. i did not want to make an example of nicky. she was a part of our family for many years, and i knew if i talked about that, i would have to bring her to the floor. i think the tragedy is the niki is being manipulated. i think she did not understand what she had got herself into a. this is the sort of thing gloria does in every election. i feel badly for nicky? -- i feel badly for nicky. >> [inaudible]

>> we knew about this. we knew what was going on. people have said, did you know about this? if i was worried about this and running for governor, you will recall a first announced on february 9, 2009. this did not happen until june, so if i was going to let nike go for political expediency, i probably would have announced before i ran for governor. the truth is, we have no idea. i like the man in candidate thing. >> you wanted to hire a nanny, and as she's bonded with the family -- this is almost a decade now. there were instances she would not go back to mexico to visit

family because she and could not go back, and you needed plausible deniability. you did not ask the question because you did not want to know. the scenario is your husband suspected that, which is why you claim you made the comment that you knew it was going to be a problem. you said you did not seek it out. >> that is so untrue. that is absolutely false. we got her documentation. we never talked about her going to mexico. we talked about her children. of we talked about her husband's job. we talk about lots of different things, but your insinuation that i turned a blind eye on this is absolutely false. it is not true.

>> can you tell us the employment agency. >> it is town and country resources. who has not had a chance? >> do you own the key money, and if so, will you pay her? >> we do not over money. she worked 15 hours a week. never as far as i know, did she work more than that. if she worked 10 hours a week, we did not pay her $23 times 10 hours. we paid her 15 hours for every week she worked. often for vacations, we paid her even though she only work a couple days that we because we were out of town. >> she says you do homer -- you do or her money. >> that is simply not true. >> if she was such a close

member of the family, why didn't you help her get legal? why did you help her get an attorney. >> when i talk to my lawyer, she said there is nothing you can do here. there is no legal stance for her, and it is probably not going to be helpful, so i decided, you have to make a decision about what you have to do. you have to go home. i did not feel it was the right thing to go out and work with an immigration lawyer. >> i heard about consulting the lawyer. >> i sent her, i think we are going to have to let you go. i have to talk to my lawyer, but i am probably going to have to let you go, then i called her back and said, we have to let you go.

>> why did you wait until then to make the smear campaign? why not when you knew this would come in the final bit of the election. we the electors want to believe not in somebody that would withhold information but somebody that would go out in the open. >> i did everything comporting with the law. when she came to me, we'll let her go. if i was going to talk about this on the campaign trail, it would have put niki of there as an example. i think the consequences may be severe. i do not know who is paying a gloria. i did not know what was niki's decision. did someone say, we know you are here illegally, and we are going

to expose you unless you do this? i was not going to make an example of niki, so that is why i did not. >> [inaudible] >> i think it has nothing to do with my character. what i did was absolutely the right thing to do. it is what all employers should do in california. it is illegal to hire illegal immigrants, and if you find out that you have hired someone who turned out to be here illegally, your obligation is to let them go. that is what i did. i think it speaks volumes about my character that once i understood, i made a tough call, but it was the right call.

>> the use of for her being deported? >> i am going to leave that to the immigration authorities. i support a guest worker program. but as one reason i am running for governor. i want the state to get back on track. we have spent a long time talking about this issue, and there are 2.3 million californians without a job. there is an illegal immigration problem. r k through 12 education is the bottom of the barrel, and this is a distraction on what i think californians really care about. immigration is a federal issue, but i think there is lots we can do, so i would like to get a guest worker program. >> had you feel about it? >> i feel badly about it. she has three children. her youngest son is six or seven years old. i feel terrible about it, but

the law is the law. ice is going to have to decide what is the right thing to do here. >> i had a telephone conversation with you when you said there was nothing you could do. she claims you said, i do not know you and you do not know may. >> absolutely false. she knows it is not true, and it is not. >> one of the key issues to this letter, this puts you in a tough position. clear things up about the question. would you take a polygraph test? >> absolutely. we were stunned when nikki told

us she was illegal. this woman had worked for me for nine years. we have seen the documentation. we went through an agency. that is what agencies are going to do. the woman comported with the requirements of the agency, so i was stunned. we looked at each other and said, while. who knew? -- and said, wow. food new? >> would you take a polygraph test? >> absolutely, because we were stunned. has anyone not had a chance? >> what kind of example would this make? what is the message coupled with the fact that you chose not to make an example out of her?

some might look down on the fact. >> i think the example i am setting is i work as hard as i could. my husband and i did everything we could to hire someone who was documented to work here. we were misled. many employers are misled, which is why we need a system mentioned earlier. .

there is a false negative rating. it is not universally used for da.

the anchor of this data base is social security. >> they have to enforce it. >> if we agree that illegal immigration is a countrproblem,n we have to enforce the law and allocate the resources. there is no point if you do not allocate the resources. >> one of the great thing sicily in force are a lot. you have to feel safe in your

home and place of business. you are next. be>> we have done spanish langue media. it is translated into spanish. i have been into latino communities. i have worked hard to win the vote. i think we are nervous about it. they are wary. they took latino americans for granted. i do not. i want every boat. they are worried about that.

another employee union is funding jerry brown's campaign. if you want someone to go to sacramento who is independent, who is not beholden to special interests, and i in your governor. jerry brown is tied to this that you never be able to make change. i will go to sacramento. i will not show anyone anything. it does not surprise me. i think we will see more funneling into this campaign $300 million has been poured into politics by the union. this is not a surprise. >> they say strong things about you.

i think they are very smart. if they see it for what it is. it is a smear campaign for . i've got lots of feedback from my supporters. every single one of them says it is totally predictable. we know what is going on. we see it is fitting manipulated and used. i think could backfire. it held me with the latino community. >> did to collar a friend? shoes around here for nine years.

you make decisions about what the right thing to do is prepare she misled us for nine years the . my view was that you have to solve this issue.

does not make a right to live burd. i feel terrible for nike. she is staying manipulated. >> she received packages that came to the house. those kinds of things. she occasionally did errands for us.

it to of one of the boys to school if they deny it there. dishes they normal housekeeper duties for the shoe is not responsible for the children. >> i do not know the answer to that burd. the dmv said was a legitimate and driver's license. >> is there anything else? >> not that i know of. not that i know of. i have to tell you.

not that i know of. i have to tell you it surprises me in some ways. " we found out that she was here, we let her go. i've only been in politics for two years. i'm getting used to these mere politics. [inaudible] >> you understood the situation. >> i do not remember. i do not think we did.

could i be faulted for that? absolutely. we could have a maternity leave. is that all right with you? bifurcati have to look back ande oper. >> we remember so much. >> we will get back to you. >> where would you pick of the mail? >> she would pick it up from the mailbox. she would bring it into our island in the kitchen and lay it out there and soared into jet mail, bills, and other things.

-- and sort it into emailed , bills, and other things. i did not find out the issue is not legal to work here until june 2009 when she came here. i announced i was running for governor february 9, 2009. >> you said it never came a. do you think this is an issue that should of been brought to the forefront? why now? >> the brown campaign is doing a massive smear campaign on me and my family. that is what we are talking about.

this is what i'm going to do. we are gathered after the fact. if you feel a sense and may be wanting to go back? >> you make decisions at the time that you feel of the right decisions. we found out the issue is illegal. we terminated her employment. it broke my heart to do it. we said you cannot be here. you cannot work for us for th. i feel it is the right thing to do. i do not feel i would do anything differently.

>> we have a new kind of mailbox. you have to have a key to open. i get my own mail parent. we've had other household help in california. all of them were documented. >> would you be willing to provide documents? >> maybe. it is important that old and we get back to the issues that californians care most about. that is jobs and the economy and getting government spending under control. here we are in a crisis.

if the budget is over 100 days overdue. the legislature is no closer than they were a couple of weeks ago. we were about to miss the payment. we are about to go to neious to pay california s. this is paymeaclassic smear pol. we have answered just about every question there is for the . we will answer a few more and then i'll go back to trying to solve the problems for californians. there is high unemployment. there is failing public schools. that is what i will turn the campaign back to. but a couple of more questions. -- i will take a couple more

questions. >> they got this letter that came to your house ahea. did they cross a line? >> i guess it depends on your definition of ethics. i do not know the full story. clearly, i think she had a gun to her head. i think this was very challenging for her. i think she has been manipulated by a very sophisticated attorney that has done this for a living for 20 years. i absolutely believe this is linked to the brown campaign, 100%. ok? >> could you go back to the statement of illegal workers? >> i do not think it is the agency's fault. they do what they are supposed to do, too. they have a copy of a driver's

license and social security card. they have a copy of an i-9. they have done good work for me. i thought niki was a great employee. i thought they tried to do what was the right thing to do. >> they said that she felt "exploited, disrespect, and financially abused powell how the respond? >> that is not true. her children came over to our house. her son often brought in -- offer a broader sense to work. they played soccer and are back yard. -- often brought her son to work. they played soccer in our backyard.

her little boys did come over and play with our dog. i have to tell you. i was hurt and stunned by what i think she was made to read in that statement. it is simply not true. she knows it is not true. she is listening now. i feel terrible for what he must be going through. she knows that is not the way it was. we will do one must question. >> [inaudible] a rethinking for ways to protect those employees? >> i do not think abused her. we pater $23 an hour.

i think that is a very fair wage for why she did. she is very good at her job. we gave her tremendous work flexibility. it is what any working mother with love in an employer. if your cha has a cold or the flu, we said not to come in that day. if she had a parent teacher conference, she left work early. that is what all employers should do. if there are employers out there that are taking advantage, that is wrong. we should not allow it. >> [inaudible] >> it is challenging. they are here illegally. by trying to go to the authorities, they jeopardize themselves. i think there are organizations that fight for the rights of

workers. that is the right thing to do. we do have to get our arms around a very challenging immigration question. we have to secure the borders and told them accountable. we've got to get a temporary guest worker program some people can work here illegally. i'm going to have to run. this is longer than i thought it would be. i had to retreat interviews with telemundo and other folks coming up. thank you for coming. i appreciate it. let's move on to solving the problems are really matter for california. thank you very much. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010] quite the state department announced efforts to get foreign oil companies to cut off business with irna. it is the latest move aimed at the nuclear program.

james steinberg announces they sanctions followed by p. j. crowley. this is about 45 minutes. >> james steinberg is here to highlight some additional steps on sanctions so we are taking today against irna. -- iran. >> i am going to make a short statement. i will make a few questions. today the united states is taking steps in accordance with our law. the state department is imposing sanctions on entered trade companies. -- for its involvement in the iranian sector. i am pleased to announce we have received commitments from 4 energy firms to terminate their

investment. these are the first public actions involving companies investing in the energy sector sanctions were imposed by the v e you prepare it is part of our international consensus to raise the cost of a nuclear obligations. it is consistent with the understanding recognizing the resolution. the government is using revenues to fund the nuclear program and procurement for the energy sector. it provide several different roles to encourage companies to end operations.

it is an international trading company of the national iranian oil company. 4 major oil companies have pledged to end their investment in iran's and j sector. companies are eligible to avoid sanctions under the special rule that is designed to encourage companies with activity in iran to withdraw. they are provided assurances to us. get taken verifiable steps to stop their activities and provided assurances not to undertake new activity that may be sensible.

we applaud the decision is dignitary has decided to use the rules to avoid making sanction of the ability. there resolving concerns with the nuclear program. in nuclear arms iran for in the stability of the world crucial to our interest and help the global economy. we believe the international community should abandon a business as usual approach to iran. companies have not yet committed to ending their activities. the state department is

launching investigations and will continue to engage with the industry to implement them to the fullest extent progress. >> there are people who are upset because there are international companies that have not made these pledges. why not just go after them now? >> i do not know who you talked to from th. we've acted in accordance to the law. we believe the model we like to see every company follow is that by the european firm. our goal is to achieve those results.

our efforts believe that we have an opportunity to do that. we will use the full set of tools available to us. our decision demonstrates this. >> you said that you are investigating companies that have not pulled out of irna. which are those companies? >> 1 strength is that it allows us to have the kind of conversation with these firms as they try to achieve results. we do not think it would be useful to discuss with specific firms. we are engaging compensations. -- conversations. >> to what extent are you concerned there will be a

substitution the set for european companies that are pulling out? there are other countries that have oil services. to what extent the do you see t? >> we have made clear that we are strongly discouraging substitutions. we encourage you not to undertake these activities. we make the potential consequences. he is in the process of having consultations with a number of key countries around the world to explain the provisions of the

act. >> how you measure how big it can be? >> what would you expect them to say? >> at the end of the day, would most care about is how iran responds to prepare this engagement. you want to make clear that there are costs to pursue. i think we have pretty good indications across the board that these measures are increasingly having a significant increase.

but we are focused on is making clear that the consequences are learning to their behavior. there is a way forward for them. they will only grow more serious out of time. the see them in the energy sector. people are racing the conclusion that they are not worth it. there is sufficiently severe. we believe the messages coming home.

quite some many firms are you investigating? what can i give you that. >> the ones i was referring to our energy related. >> there is the possibility. >> i can only say i had a very good conversation with my counterpart i made very clear that one of our concerns is i iran's behavior. also with respect to destabilizing activities. i made clear and important part in moving forward was playing a constructive role in making clear that these are unacceptable behavior is. >> i'll let and speak for themselves.

i made clear that these are important issues. they could contribute to a better relationship. bugs you have indications of pressure starting to work. can you be any more specific and tell us what these indications are? everyone says they have indications. we do not really give specifics. >> i do not think there is a single metric that we can use. there are firms that announced they are no longer going to do this with iran. we recognize the they will try to find others to take the place.

it has the nature is not trying to tone down the an iranian technology, we are looking for a direct impact on the people who can make significant investments that can contribute to their procurement efforts. those of the things we are pointing to. those of the things we can continue to provide as they get more enforcement. we are trying to make clear that if they do not if they will continue to face these difficulties. >> you mentioned the sanction that has a subsidiary in switzerland. have you had discussions?

>> have the had discussions with your counsel? >> the parent is yes. ->> there are members in congres that have been urging you to take on russian and chinese companies. they say they are doing a lot of business. had you chosen not to do that? >> not at all. i cannot discuss specifics. there are a lot of reports of companies that people have concern for thei. i think the range is not as great as some might assume. we are following the process

outlined in the statute. if we find credible evidence come in fairly good to the next days to conduct an investigation. they may make a decision. it is a two-step process. we are negotiating for european firms by agreeing to withdraw. as we get reports, we talk about particular activities. we look into these. we look at a determination. >> he said there are negotiations with these companies. >> we are certainly talking to other companies. our goal is to persuade people.

we have been very encouraged. they were very constructively with us. they came through with irresponsible measure. i think this will have a positive effect on companies when they say that this is what responsible companies are doing. unfortunately, i'm going to have to go. >> what can they not do today they could do prior to the sanctioning? >> there are specific sanctions. >> if you do not mind, we are done with this.

the company will be prohibited from receiving exports. private u.s. bank loans exceeding [unintelligible] it to be barred from any procurement contracts with the united states for the. thank you. >> thank you. >> did that company get any of those four things that he just described? i find hard to believe that american banks are lending to the swiss subsidiary of the iranian national company?

>> most is already prohibited. is another way to show that this is not a company. >> what reaction lead doing? >> de yardy do the business provided for them -- the yardy do the business provided for them. >> u.s. companies are already restricted from doing much of this under the treasury sanctions.

it does demonstrate that if they are partnering, they could be subjected for the. >> what wasn't? >> i do not want to get too much into the technicalities. in general, it is prohibition. >> why should we see it as simply a gesture avoid a row contents? i do not think they've been granted a whole lot of contracts.

there are a cover by u.s. sanctions. >> it doesn't a message to others not to work with them fro. >> even if no was working with them? >> the main imports would be sending a message to non-u.s. companies. >> what discussions have they been having? >> we cannot get into the exchanges. they were aware this designation was coming.

>> thank you. thank you. >> this afternoon, the secretary will have a meeting with vice president and foreign minister of panama. they will discuss this strong economic ties between panama and the united states and underlying factors of sustainable growth including strong commitment to the principles of democracy and the rule of law. i talk about security issues across the region. they work together to combat narcotics. there is a national security adviser. it follows up on her meetings lastly.

earlier this week with the defense minister. they will continue a similar agenda talking about developments. the secretaries in some time on the hill this morning. -- secretary spend some time on the hill this morning. they talked about efforts to rectify the new start agreement. she encourage swift consideration of the treaty by the full senate. they also talked about a range of global issues from afghanistan and pakistan including support for pakistan.

i am certain the secretary thinks senator kerrey for the effort. usaid a administrator is traveling to nigeria to attend the celebration of its 50th anniversary. with that, i will take your questions. >> did she have the refugee consultations? >> she did. she what is the question?

to did have consultations -- she did have consultations. she is joined by kathleen sibelius. >> did they provide people with a number for next year? >> i believe the number for next year is the same it was for this year. 80,000. >> we expect an announcement from the white house. >> that is a good question. we will find out. i will be happy to provide details on it. >> i will defer to the pakistani authorities.

i think they are working with the government to investigate the incident earlier today. we have multiple routes to reach the supply. we are aware of one with the pakistani government. we have given the frequent descriptions. this is the kind of allied you want? because of the supply route. >> we are talking to the government of pakistan. there has been an incident

along the afghan/pakistan border. we take seriously our responsibilities as a partner. there is a review on going. >> we met with the president today. >> we have a range this issue with the pakistani government. we have encouraged them to investigate it fully. we take all human rights allegations very seriously. there is also the issue of extrajudicial killings. it has been a part of our

ongoing conversation. we are awaiting further information. >> they said that they are quite confident of the democracy. the military pool is not likely. are you confident in the structure? >> we are doing everything we can to support the government in pakistan.

we committed time and resources to develop to how this government. it is very important. >> do you know anything about these reports that the burmese operation later will be released after the election in november? >> we want to see it released today. >> they are tying its, leaving

it a security council. >> they want to see india and pakistan were collectively together to resolve tensions regarding kashmir. we understand that they are all still interested in the reform. >> is it going to pay gender -- [unintelligible] >> it is an issue that comes of an ongoing dialogue. i cannot predict whether it will come up in november.

>> is there a picture of kim jong-il's third plan? is there any change or plants fr the approach in north carry it? will there be any change your plans? >> our policy is based on our national interest in the interest of our allies in the region. it is not a personality base. we had definite views on what north korea should do. these do not change the face on this. >> yesterday, there was a un representative that had a statement that said it will

strengthen nuclear deterrencent read giving giving up. >> it is not surprising he would hear these kinds of statements at a time where there is a high level of meetings going on. we have made our position clear. north korea has to denuclearize. there is a commitment that was made from 2005. we would hope that north korea would follow those commitments as numbers 3 and meet its obligations. -- as in north korea meet its obligations. he met today in the region. he met yesterday with prime minister netanyahu.

we expect he will have additional meetings with prime minister netanyahu and president abbas david euille tomorrow. >> hasn't been set where he goes after? >> i have not seen this. >> he will have additional meetings with prime minister netanyahu. >> you do not expect him to come home? >> are there any follow-up meetings with syria following the meeting today? do you have any expectation that senator mitchell might return in the near term? >> i do not believe that he will be going to damascus on this trip. he went through the likely

scheduled before he left. that was on his list at the time. here is not entirely sure the times in sequences. i will try to get the details. >> any other serious meetings? >> the head senator mitchell could there. you have the deputy secretary. there is a lot of activity. i confirmed a number of nominees for the. robert ford was not confirmed last night for damascus. we will continue to engage the syrian government.

>> are they considering announcing [unintelligible] could you comment on that? >> other than to say george mitchell has had meetings this week with both the prime minister and president of boss, he will have -- president abbas, he will have additional meetings. we will do everything we can to encourage both parties to stay in the strike negotiations. yesterday afternoon, secretary clinton had fallen calls with the egyptian foreign minister. we are talking to others in the region in anticipation of

important meetings next week. we are talking to other governments in the region about how to support the leaders. we are making difficult decisions in the current days. we are doing everything to move it forward. >> i will come back. >> may come up as a suggestion? >> we are sharing our ideas as we have indicated. i will not talk about specifics. >> this is in u.s. policy since the beginning of this administration. . has this changed? >> no. >> people have said this on the

record. >> you are asking two different questions. >> there have been a flurry of reports about this alleged letter that obama has sent. on deck, there was no such letter. >> whether there was are not, the report also suggest the u.s. is offering a bunch of guarantees to israel. they appeared to be exactly what you are doing now. they also talk about the 67 thing ordered a basis for negotiation. unless i am completely wrong, everyone from the president down has said that the basis is the '67 borders. am i correct? >> there is a formulation the we have used. the formulation has not changed.

>> 67 borders with agreed swaps? >> there is a little more language if you want. i do not have it. there is more to it than what you talk about. can we get the formulation? >> all of these reports about a letter being sent to the prime minister, are any correct? >> there is a letter to the prime minister. >> was there something else? >> -- there was not a letter to the prime minister. >> was a something else? >> the president sent a letter to prime minister netanyahu outlining certain things. >> is the white house -- the israelis claims that they can extend the freeze for two more months. they are facing israeli troops on the issue out of the jordan

river. >> beyond saying we are talking about areas of interest as a means of encouraging both to continue in direct negotiations, i am of one to go into specifics. -- i am not going to go into specifics. >> obama is asking prime minister netanyahu to extend it for 60 days. can you confirm that? >> the president last week in his statement are the u.n. confirmed our position. that position has tnot change.

>> they indicated it will be meeting the oil fields. it is not included in the briefing prior. i am wondering why that was. >> we announce specific steps that come under the iran asian legislation. when it had conversations with japan about that issue. it is not a part of this action. >> japan has announced steps that it is prepared to take in support of resolution 1929. we think these actions are

having the effect that deputy secretary steinberg outlined. >> he said he is not aware of any in your -- any anger. did he talk to any republicans? >> i do not have a list of who he talked to bur. >> [inaudible] >> bynum jeff was in the meeting a few minutes ago. we maintain our contact and dialogue on a range of subjects. some of those involved terrorism cooperation.

today we talked about the potential for u.s./syrian relations panet. this is part of our fundamental decision to engage in syria. we are doing that. >> i cannot say whether it came up today. this is a decision for iraq to make t. are engaged in discussions with the iraqi government the. the white house has announced contacts that they have. we a